Identifying the Scams That Won’t Help When You Apply Online for a Credit Card

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If you're trying to repair your credit so you can apply online for a credit card, it's only natural to look for the quickest, easiest way to do it. Unfortunately, however, there are "credit repair" services and agencies that prey on people who don't know how to repair their own credit. There are a number of scams and outright lies that promise you can get online credit card approval, but that won't do you one bit of good. Here are a few to avoid.

Claims to clean up your credit history or remove negative information from your file. The Fair Credit Reporting Act regulates what can and cannot be included in your credit report and how it can be removed. If your credit report contains inaccurate negative information, you can get it removed yourself by filing a dispute. If the negative information is accurate, however, nothing but time will remove it permanently.

Sometimes unethical credit repair services can temporarily remove negative information from your file by filing a bunch of disputes about your credit history. The credit reporting agencies must remove negative information within 30 days of having a dispute filed if they can't prove it's accurate, even if an investigation is ongoing.

It usually takes more than a month to investigate a dispute so, for a little while, your credit score may look pretty good-and the credit repair company will make sure that's the credit score you see and pay them for. You may think they've done their job, and apply for credit, assuming you'll get online credit card approval easily. Once the investigations are completed, however, the negative information will go right back into your file and you'll get turned down.

Claims to help you establish a completely new credit history. This one is not just a scam, it's a felony. The credit repair company will suggest that you apply for an Employer Identification Number, and use that number instead of your social security number when you apply online for a credit card. They tell you that, by using a different number, you can just walk away from your bad credit and start all over building a good credit history.

It won't work. In the first place, an empty credit history sends up a big red flag to anybody who inquires about it, so you're not likely to get online credit card approval this way. In the second place, you can be prosecuted for giving false information on a credit application. And in the third place, it's a felony federal offense to use a false social security number AND to apply for an employer identification number under false pretenses.

Claims about improving your credit history fast and getting you a mortgage, loan or credit card. This is a fairly new scam and an expensive one. Sometimes these companies even pose as mortgage or credit card companies. For a good-sized up front fee, they promise to remove negative information from your credit record and help you apply online for a credit card.

This is illegal. According to the Credit Repair Organization Act, credit repair companies cannot collect money from you until they have completed their services. These companies don't provide any services; there is no way they can remove accurate negative information from your credit report, and they can't help you get any credit card you can't get on your own.

The 900 Number Scam. An ad will promise that you can get apply for credit cards and get approved with their easy credit fix method, and tell you to call a 900 number for information. The whole point of this scam is to keep you on the phone as long as possible, because they are making many dollars every minute you talk to them. You are always charged for 900 number calls, and the charges can be exorbitant, so don't fall for this one.

So, how can you repair your credit so you can apply online for a credit card? Self-help is usually all you need. Here's the formula:

• Starting today, determine to live within your income and not add any credit for a while. That may mean cutting expenses pretty drastically for a while, and it may mean finding ways to add income so you can pay your bills on time.
• Pay on time, every time. Don't be late unless it's an extreme emergency, and then call the company before the payment is due and let them know when you will make a payment.
• Beginning with your smallest debt, start paying them off. Pay the minimum payment on all but the smallest debt, and put every extra penny you can find into that one. You'll be surprised at how quickly you pay if off. Then move on to the next debt, and so on.
• As you pay accounts off, close them. Otherwise they remain on your credit report as open accounts, and that lowers your score.
• If you need help, get it. Have someone you trust and who is good with money help you develop a budget and a debt repayment plan. Get help from a consumer credit counseling service. These are non-profit agencies that help you with budgeting and money management. In extreme situations they might help you work with your creditors to reduce your payments, but they won't promise an easy fix. Since money management problems are often rooted in emotional issues, you might even consider personal counseling.
• Once you've got your finances under control, apply for a secured credit card-one that's backed up with money you have in the bank. Use it and pay the balance off every month. Before you know it, you'll be back on your feet and you can apply online for a credit card and know that you'll be approved. Plus, you'll have developed the discipline and habits that will keep you from getting into financial trouble again.